France postpones pension reform talks until 2021

PARIS (Reuters) - Negotiations between the French government and unions over a controversial pension reform will be postponed until 2021 to focus on economic recovery in the wake of the COVID-19 crisis, Prime Minister Jean Castex said on Friday.

The reform, pushed by President Emmanuel Macron and the single greatest revamp of the pension system since World War Two, was halted in its tracks in February by the pandemic.

The proposal angered unions and brought thousands of people onto the streets at the turn of the year. The decision to push it back aims in part to ease those tensions as France grapples with the economic fallout from the coronavirus.

“The priority now is the battle against the crisis, for employment and to tackle unemployment,” Castex told reporters after his first meeting with union representatives since becoming prime minister this month.

Castex said the reform, which includes raising the retirement age by two years to 64, would not be scrapped. A deferment until after the 2022 presidential elections might defuse union and voter concerns, but would undermine Macron’s already-weakened credibility as a reformer.

The reform is central to Macron’s ambition of creating a more flexible and competitive labour force. But trade unions who argue that it will erode hard-earned benefits and leave pensioners worse off.

Castex also said that the full implementation of unemployment insurance reform would be postponed to Jan. 1.

Reporting by Caroline Pailliez; Writing by John Irish; Editing by Kevin Liffey